This article, available here, introduces the first taxonomy of collusion on the blockchain. It explores the functioning, robustness and limits of such collusive practices, and highlights how companies may use smart contracts and sophisticated algorithms to collude in the blockchain environment.



An introductory section describes blockchain technology and its potential uses.

A blockchain is an open and distributed ledger recording all sorts of transactions between users. Consensus mechanisms are used to make sure that information and transactions are recorded on the blockchain. This, in turn, means that data and records on the blockchain cannot be easily modified, which in turn breeds trust.

Blockchains assign three different roles to their users. Blockchain users may read the information on the blockchain, propose new transactions and validate the blocks. On public (“permissionless”) blockchain, all users can read and propose new entries into the blockchain. Block validation is restricted to some users only, following a consensus mechanism. On private (“permissioned”) blockchains, all three actions can be limited to certain users, and these limitations may be changed anytime.

Based on their utility, three categories of blockchains can be identified. The first model (blockchain 1.0) comprises crypto-currencies where blockchain tokens are used to trade outside of the sole blockchain system. The second model (blockchain 2.0) includes smart contracts and allows blockchains to implement automated transactions between users by executing predefined algorithms. The third model (blockchain 3.0) encompasses all the other uses of blockchains, for instance, peer-to-peer platforms (e.g. ridesharing, social media, online research and so on).

A second section focuses on collusive arrangements and how the blockchain may change them.

Collusive conduct is generally enforced by parties to it without recourse to (legally) binding agreements. This points to the importance of trust for anticompetitive arrangements. The way leniency breaks down this trust goes a long way towards explaining why leniency has become the most effective tool in the fight against cartels.

It follows that, when colluding companies trust each other, it is often more difficult for the regulator to identify collusive practices; and blockchain can enhance cooperation between market players, fostering cooperation between them. This effect may be reinforced by smart contracts that automate transactions between market players. To the extent that the technology allows for binding agreements, it diminishes the need for colluding parties to rely on the threat of punishment strategies, which makes collusive outcomes more stable and reduces the vulnerability of collusive arrangements vis-à-vis competition enforcement.

A third section then identifies and discusses new challenges raised by the blockchain as regards collusive arrangements. This section is divided into discussions of the birth, life and death of collusive arrangements, and comprises the core of the paper.

As regards birth, the blockchain may be used to facilitate the creation of collusive agreements.

One should distinguish two types of potentially collusive agreements: (A) agreements that directly concern the conditions of access, use and/or exit from the blockchain, and (B) agreements that are created outside the blockchain and which are using the technology to make the arrangement more efficient.

As regards agreements on the access to and use of the blockchain, the creation of a blockchain can itself amount to a prohibited agreement or collusive practice under EU and US competition law.  However, the type of blockchain is likely to affect the competitive assessment of such arrangements. The creation and participation in a public blockchain should not trigger antitrust and competition law, unless the blockchain is created for the sole purpose of sharing future information in order for companies to collude. On the other hand, private blockchains – and the rules that govern access to them and their use – may reflect anticompetitive collusive arrangements.

Companies may also choose to use a blockchain to enter into a collusive agreement. The most important distinction here is between collusive arrangements implemented through smart contracts and those that are not. Without smart contracts, cartelists can use a public blockchain to ensure that all companies have access to all information, which will be listed in the same place, without any of the users being able to hide this information from the others; or use a private blockchain, whereby all companies involved in a collusive agreement will get exclusive and secure access to the information. With smart contracts, companies can use both public and private blockchains to automate the agreement, thereby making collusion more predictable and transparent.

The blockchain also provides an environment conducive to the life and implementation of collusive arrangements by preventing the colluders from cheating on the agreement and by reducing the risk of detection.

A blockchain allows colluders to monitor each other’s market behaviour more easily and to punish deviations from the collusive arrangement. Via smart contracts, the blockchain also makes it possible to regulate automatically the price operated by the colluders and to divide earnings according to predefined criteria. Furthermore, collusion will usually survive most deviations from the agreements as long as these behaviours do not challenge the pricing structure. Smart contracts may be prepared to correct such deviations from collusive agreements by putting in place automated and targeted punishments, such as the transfer of blockchain tokens from the party breaching the collusive arrangement.

The blockchain may also ensure the secrecy of certain information from outsiders, protecting collusive arrangements from detection and greatly complicating investigative efforts. The level of secrecy will depend, of course, on the specific design of the blockchain. Public blockchains are freely accessible, and all information contained in them is in the public domain insofar as anyone can access it without even “entering” the blockchain. On the other hand, information stored on private blockchains is only available to their users. As regards competition enforcement, the blockchain may lower the possibility of detection as a result of its opacity, the fact that it may secretly affect market conditions and thereby make more difficult the screening of markets by competition authorities, and of the reduced need to produce incriminating internal evidence when implementing cartel.

Lastly, the blockchain creates an environment conducive to the undetected death and disappearance of collusive agreements.

Smart contracts can be used by parties to exit collusive agreements, leaving little evidence for competition enforcers other than (hard to access) blockchain entries. Furthermore, private blockchains may allow not only on-demand exit from a collusive agreement, but also ensure the deletion of incriminating data, since the owner of a private blockchain retains the right to override, edit, and delete the entries on the blockchain, or even to modify the way the blockchain itself operates. This may diminish the incentive for companies to apply for leniency – an area of concern, particularly against a background of reduced leniency applications over recent years.

Blockchains may also be used to exclude a company that deviates from a cartel. In practice, this is restricted to private blockchains, since one cannot exclude a participant from a public blockchain – even if smart contracts could theoretically be used to similar effect. As far as private blockchains are concerned, exclusion may be total or partial since it is possible to modulate the three degrees of blockchain use: reading the information, adding transactions and validating the blocks.



This is a valiant and valuable attempt to map out the potential implications of various types of blockchains and smart-contracts for collusive arrangements. I may be mistaken, but I think that the extent and depth of (antitrust) analysis in this paper makes it clear that blockchain may pose significant challenges for antitrust, but, unlike what to the author claimed in the paper I reviewed last week, is not likely to kill competition law and practice as we know it.

I can recommend this piece to anyone with an interest on blockchain, even if I have a few quibbles. In particular, I would have liked to see a clearer separation of the consequences for collusive arrangements of blockchains and smart-contracts. These are distinct technologies that may, when deployed together, reinforce the challenges that collusive arrangements pose to competition enforcement. Nonetheless, they may create challenges on their own. Blockchain and smart-contracts (and algorithms, for that matter) can all have an impact on collusive practices, and these are worth discussing on their own, as well as in tandem.

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